DATE: January 26, 2001

SUBJECT: Civilian Agency Acquisition Council; Class Deviation from Federal Acquisition Circular (FAC) 97-21

SOURCE: Memorandum dated January 26, 2001

AGENCIES: Civilian Agency Acquisition Council

ACTION: Notice

SYNOPSIS: On January 26, 2000, the Civilian Agency Acquisition Council (CAAC) authorized all civilian agencies (other than the National Aeronautics and Space Administration, which is covered by the Defense Acquisition Regulations (DAR) Council) to authorize a class deviation postponing the effective date of FAC 97-21, Contractor Responsibility, Labor Relations Costs, and Costs Relating to Legal and Other Proceedings, from January 19, 2001, to July 19, 2001.

EDITOR'S NOTE: For more on FAC 97-21, see the December 20, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular 97-21, Regulation (FAR); Contractor Responsibility, Labor Relations Costs, and Costs Relating to Legal and Other Proceedings."

For more on President Bush ordering the delay in the effective dates, or withdrawal, of all regulations promulgated during the Clinton Administration that have not yet gone into effect, see the January 24, 2001, FEDERAL CONTRACTS DISPATCH "Executive Office of the President; Delay in Regulatory Implementation."

EFFECTIVE DATE: January 26, 2001.

SUPPLEMENTAL INFORMATION: On December 20, 2000, FAC 97-21 was published, amending the FAR to require that contracting officers take into account a contractor's compliance with tax laws, labor and employment laws, environmental laws, antitrust laws, and consumer protection laws, when determining the contractor's responsibility. The rule took effect January 19, 2000, the last full day of the Clinton Administration. The rule was opposed by industry associations, several members of Congress, the Department of Defense (DOD), and the General Services Administration (GSA), while it was supported by unions and several members of Congress.

The FAR is administered by two councils: the Defense Acquisition Regulations Council (consisting of the military services, the Defense Logistics Agency, and NASA) and the CAAC (consisting of all the other civilian agencies). On January 26, 2001, the CAAC authorized all civilian agencies other than NASA to deviate from the changes made by FAC 97-21 for six months, until July 19, 2001, or until issuance of an appropriate FAR change, whichever occurs first.

The following FAR sections were affected by FAC 97-21: 9.103(b), 9.104-1(d), 9.104-3 new paragraph (c), 14.404-2(i), 15.503(a), 31.205-21, 31.205-47(a) and (b), 52.209-5, and 52.212-3(h). Electronic versions of the FAR as it existed before FAC 97-21 is posted under "FAR (Archived) HTML" for FAC 97-20 at http://www.arnet.gov/far/.

The CAAC memorandum states, "The Administrative Procedure Act, 5 U.S.C. 705, gives authority for a stay of the final rule: 'When an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review.'" Citing the lawsuit filed in the United States District Court for the District of Columbia on December 22, 2000, by the Business Roundtable, the Chamber of Commerce, the National Association of Manufacturers, the Associated General Contractors of America, Inc., and the Associated Builders and Contractors, Inc., seeking to overturn the final rule, the CAAC recommended that agencies issue a FAR deviation in accordance with FAR 1.404, Class Deviations, in which they state, "In the interest of justice, the (agency name) believes implementation of the final rule should be voluntarily stayed...Based on these concerns and other concerns expressed within the Federal Government, I [the agency's senior procurement executive] have determined that the 30-day effective date did not give Federal contractors and the Federal Government sufficient time to meet the new obligations and responsibilities imposed by the December 20, 2000, final rule."

GSA was the first to issue a FAR deviation in the recommended format, quickly followed by other agencies such as the Department of Agriculture and the Department of Housing and Urban Development.

EDITOR'S NOTE: The DAR Council has not yet issued a class deviation. However, since the DOD was a strong opponent of FAC 97-21, look for DOD to issue a class deviation in the near future. Also watch for a proposed rule to repeal FAC 97-21.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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